Microsoft: Yep, New Zunes. And DRM-Free Music?

Our spy in Seattle (actually, 20 minutes or so outside of Bellevue) tells us that Microsoft did indeed show off new Zunes today – a $149, 4 gig version and a $199, 8 gig model, both of which use flash memory, and an $249, 80 gig version that uses a hard drive. The machines, and the music store designed to fill them with music, are supposed to be using much more elegant software than the first Zunes. But that certainly won’t be enough to loosen Apple’s chokehold on the MP3 player and digital music markets.

What is interesting, though: Apparently Microsoft, a la Amazon, is going to try to use DRM-free tunes as a differentiator with its music offering as well. Here’s where our spy, who admittedly wasn’t paying close attention, let us down: We don’t have a good sense of how this is supposed to work, since the Zune’s main selling point until now has been its wireless “sharing” feature, and that by definition has DRM restraints. Microsoft execs wouldn’t disclose which labels they are working with, though the two obvious candidates are EMI and Universal, who are already selling DRM-free music via Amazon (and in EMI’s case, Apple).

We imagine this will become clearer tonight, when Microsoft’s embargo lifts and the Wall Street Journal, New York Times and other outlets weigh in. Until then, you can read about the product specs on Seattle TV station King 5’s website.

Alas, the King 5 report has been disappeared. Most of the relevant info, fortunately, can be found on Zune-online.com.

EMBARGO WATCH (Unofficial results, as of 12:15 EST): Reuters weighs in here; the NYT’s Jeff Leeds has details here. Gartner analyst Van Baker helpfully provides quotes for both outlets. The WSJ’s readers, however, remain in the dark can now read about it here ($). CNET takes its turn here, with assists from both Baker and MSFT marketing exec Jason Reindorp, another friend to the embargo-watching community. Valleywag’s Owen Thomas explains the futility of embargoes here. Oh yes — the official press release, issued at midnight, is here.

More DRM details from the NYT — in this case, “DRM-free” means “sort-of-DRM-free”:

Microsoft also said the library of songs available on its digital music service would soon include more than one million tracks without copy-protection software, known in the music industry as digital rights management or D.R.M. But the company noted that even songs without copy protection would still be playable only three times when they have been passed from another Zune user.